Oracle’s Big Tech rivals such as Amazon, Microsoft and Google have helped reassure investors about their big capital investments by posting strong earnings from their giant cloud units.
But last quarter, Oracle’s cloud infrastructure business, which includes its data centers, had worse-than-expected revenue of $4.1 billion. Ellison’s company is also relying more on debt to fuel its expansion.
Net income rose to $6.1 billion in the quarter, boosted by a $2.7 billion pretax gain from the sale of semiconductor company Ampere to SoftBank.
Maguire told investors the company added an additional 400 MW of data center capacity in the quarter. He said construction is underway on its large data center cluster in Abilene, Texas, which is being built for OpenAI.
Maguire, who took over from Safra Catz in September, said there was enough demand from other customers for Oracle’s data centers if OpenAI did not take the full amount of the contract.
“We have a very demanding customer base, such that whenever we find ourselves [with] Capacity that is not being utilized is allocated very quickly,” he said.
Co-founded by Ellison as a business software provider, Oracle was slow to move toward cloud computing. The billionaire remains chairman and its largest shareholder.
Investors and analysts have raised concerns in recent months about the upfront spending required by Oracle to honor its AI infrastructure contracts. In September Moody’s flagged the company’s reliance on a small number of large customers such as OpenAI.
Morgan Stanley estimates that Oracle’s net debt will increase to approximately $290 billion by 2028. The company sold $18 billion of bonds in September and is in talks to raise $38 billion in debt financing through several US banks.
Brent Thill, an analyst at Jefferies, said Oracle’s software business — which generated $5.9 billion in the quarter — provided some buffer amid accelerated spending. “But the timing mismatch between upfront capex and delayed monetization creates pressure in the near term.”
Chief Financial Officer Doug Kehring said the company is renting capacity from data center specialists to reduce its direct borrowings.
The loan to build the Abilene site was raised by start-up Crusoe and investment group Blue Owl Capital, and Oracle has signed a 15-year lease for the site.
“Oracle does not pay for these leases until the entire data center is delivered to us,” Kehring said. He said the company is “committed to maintaining our investment-grade debt rating.”
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